The demand for subway service is soaring. In the private sector, such soaring demand would probably lead to more service. Why not at the MTA, where peak hour subway service is more than 20 percent lower than it had been 60 years ago, as I showed here?
I plan to review a number of technical and financial issues below, but will state the underlying issue up front.
Who rides the subway? People that the political/union class, the New York State politicians and the interest groups that support them, think of as serfs. Younger generations, who have been made successively worse off in the economy, public policy and even family life. And who tend not to vote, and certainly do not challenge incumbent politicians by running for office in state and local elections. Immigrants, who can neither run nor vote. And the working poor, young and old, immigrant and native. Many of these people chose to move to New York City precisely so they could live a life that was not organized around automobiles. And the political/union class, whose members tend to drive everywhere and think of mass transit, walking and bicycling as beneath them, seek to make the serfs pay as much as possible with as little as possible in return, for transit and in general. Because they can. No so much up front, which might provoke a reaction, but in the future, which has a way of becoming the present.
In this situation “the MTA” is nothing but a whipping boy, a subterfuge, a way of fooling people who can’t be bothered to pay attention. And empty shell the real perpetrators hide behind. Those laughing in the background, those really responsible for what has happened, and will happen, are the state legislators, the former state legislators now in other offices such as city and state comptroller, and the former legislators now in jail. The current and, to a greater extent, former Governors and Mayors. The union leaders, and retired and soon-to-retire members, along with the contractors and their unions. Even the so-called transit advocates, who pursued past fare reductions – to be paid for by present and future fare increases and service cuts. All the beneficiaries retired to Florida or gone to the grave.
With a particular spot in hell deserved by anybody who at any time asserted that the whipping boy designed to receive the blame – the MTA – had “two sets of books” and “hidden billions,” even as its debts were, in reality, soaring. Anybody who reported this “fact” as such. And the MTA board members and leaders who signed off on those soaring debts – in exchange for being allowed to serve as MTA board members and leaders.
It is likely that the political/union class of 1954 also thought of subway riders as a bunch of serfs to be squeezed. But they didn’t dare to act on those beliefs, because the subway riders of 1954 still voted, and might have considered running for state and city office. And thus state and city elections were contested in 1954, not only between the Democrats and a Republican party that was less odious than that party has become, plus additional parties, but also within the parties them themselves.
Has real political representation been stolen from younger generations of New Yorkers, the vast majority of them? Or are they getting what they deserve because they couldn’t be bothered to pursue it? Whatever the answer, much of reason the serfs are being squeezed on the subway today has to do with the burden of non-decisions and deals from the past 20-plus years. A burden that won’t go away even if and when the serfs finally wake up. With this root cause in mind, let’s examine some of the specific reasons that soaring subway ridership has been met with diminished subway service.
Safety and Subsidies
Safety and insufficient subsidies are the causes of diminished service that MTA managers, the Transit Worker’s Union (TWU), and certain transit advocates would probably want to blame, but this is misleading.
With regard to financial constraints, these groups would probably claim that the MTA needs and deserves more non-fare money for operations. Not only to provide improved service, but also to just maintain the service provided now. This assertion, however, ignores how much more non-fare revenue the MTA has today compared with 1954, when service levels were higher.
Although NYC subway fares cover a relatively high share of subway operating costs compared with other U.S. transit systems today, it is certain that fares are covering a lower share of costs than had been the case back in 1954, when service levels were higher. Back then all toll revenues, and most available tax revenues, were being used for new highways, not existing subways. And there were no specific taxes dedicated to mass transit, as there were to highways. Back then any deficit of fare revenues relative to subway costs had to be made up out of the New York City budget, and that deficit was kept as low as possible.
It was to get out from under the transit deficit that then Mayor Lindsay turned the city-owned subways over the MTA in 1968. Since then a series of dedicated taxes have been added, and surplus toll revenues have been used for mass transit. Dedicated taxes are providing the MTA with $5.4 billion in operating revenues this year, according to MTA budget documents. The $1.8 billion in toll revenues are offset by just $510 million in bridge and tunnel expenditures, leaving a $1.3 billion surplus for other things. That is $6.7 billion in non-fare operating revenue for transit, more than the estimated $6.1 billion in fare revenue this year. And while the figures are for the entire MTA, the subway benefits as well.
If the NYC subway could cover its costs on an “auto-equivalent basis,” as I argued it ought to do here…
then there would be no financial constraint that prevented the MTA from increasing service. The riders themselves would pay to buy, maintain and operate the additional trains (with other funding sources covering the cost of maintaining and operating the right of way and stations – costs that are incurred regardless of the level of service). It is the dependence on funding from a hostile political/union class that has put subway riders in a position to be squeezed to begin with.
With regard to safety, it is true that over the years the trains and signal systems have been modified to make subway service safer, to the detriment of speed and capacity. Field shunting, the equivalent of overdrive in gasoline engines, was eliminated on the subway cars. Additional signals were installed to stop trains that exceeded much-reduced speed limits. These modifications were imposed to make it less likely that a subway train would rear-end another, or run off the track.
One can see the effect on the Lexington Avenue express tracks, which carry the 4/5 trains. In 1954 this set of tracks carried 32 trains during the peak hour, its capacity at the time, but the MTA ran just 27 peak hour trains in 2014, the most it believes it can operate reliably given existing signaling. The Flushing Line, back in 2014, had a capacity of 40 trains per hour and ran 36 at the peak hour, compared with 27 today.
Nowhere else on the system, however, does this excuse hold water. On every other line service levels are not only lower than they had been in 1954, but also lower than the track capacity of 2014, despite the grade timers and speed restrictions. On the Canarsie Line, for example, only 20 subway trains run at peak hour despite the installation of a CBTC signal system that in theory would allow far more. And service drops off steeply from the peak hour. The commute home, as a result, is far more of a packed-in and much-delayed hell at 7:00 pm than it is at 5:15 pm.
Monopoly “Labor” Oligarchy
One actual reason for diminished subway service is that people who work for NYC and NY State agencies, as unionized civic service employees or contractors, have (like the one percent) become much richer relative to everyone else. And therefore everyone else can afford to pay for far fewer of them, even at the highest tax burden in the nation, with diminished public services provided in return. New York City’s public unions often claim to be “fighting for the people” by making the rich pay for everything extra they take, but that only works at the high points of bubbles. In a normal economy ordinary people end up paying the price for both kinds if increasing privilege and entitlement, by the executive/financial class and the political/union class alike.
As I showed here…
In Downstate New York, the mean earnings (including non-wage benefits) of private sector workers outside the high-paid Finance and Insurance sector fell 1.4% from 2001 to 2014 when adjusted for inflation. That includes all the one percenters outside finance – ordinary workers fared worse, and have fared even worse outside metro New York than they have here. The mean earnings of those in the Finance and Insurance sector, while still sky high, fell 13.6% during those years. But the mean earnings of those employed in state and local government increased 17.6%.
Most of the increase in what unionized public employees are getting is not in the form of cash wages that everyone can see, and that the workers themselves might appreciate while they are on the job. It is in the form of fewer hours in a week (or the same hours but with overtime pay), fewer days worked in a year, and fewer years worked at all relative to the number of years spent in retirement. These perks the workforce appreciates not at all until they are gone, and thus allow the unions encourage hostility, low morale and entitlement while claiming poverty.
The soaring cost of benefits due to more years in retirement relative to years worked is the reason that spending on NYC local government workers absorbed about the same share of all NYC residents’ personal income in 1992, 2002, and 2012, but the share of that income going to local government to wages and salaries plunged. As I showed here.
As did the number of NYC local government workers per 100,000 residents. As I showed here.
Focusing on transit, in 1954 most NYC employees, including transit workers, received a half-pay pension at age 60, far more generous than most workers received at the time but still reasonable given the lower life expectancy 60 years ago. And city workers contributed 6 percent of their pay to those pensions. Today transit workers get a half pay pension at age 55 after just 25 years of work. With today’s life expectancy, that is one or more years retired for each year worked. Today the workers only put in 3 percent of their own pay into the pensions. Moreover, as I noted here
A retroactive pension increase in 2000 suddenly caused the amount of pension benefits paid out by the NYC Employee Retirement System to increase by 37.9% more than inflation over a couple of years, as payouts per worker soared. And pension contributions by public employees, including transit workers, fell by more than half as the 3 percent employee contribution was eliminated after 10 years of work. None of these pension enrichments, which were claimed to cost nothing, were paid for at the time, let alone pre-funded. As a result the cost of this deal continues to explode 15 years after the fact.
Once unionized public employees demanded the same well being as private sector workers. Today, like the top executives who sit on each other’s boards and vote themselves a higher and higher share of private sector money, the political/union class only accepts comparisons with itself, and with people on Wall Street, not the serfs.
The Transit Workers Union is far from the most guilty in this regard. Despite soaring per student spending on teachers, for example, the schools have not improved, as all the money has gone to earlier retirement. With 109,000 instructional employees, moreover, no more than perhaps 45,000 classes are meeting at any one time, and yet the United Federation of Teachers demanded and got even more time out of the classroom in its last contract. The only reason the schools aren’t even in worse shape is that enrollment has been falling (unlike transit ridership which has been rising), as the city has attracted hundreds of thousands of childless young workers who pay taxes but require virtually no public services other than parks and…mass transit. These people are a huge fiscal cash cow. Even so, however, class sizes remain high.
As for the police, despite 2.8 times more officers per 100,000 people than the U.S. average, the Patrolmen’s Benevolent Association threatened to stop protecting New Yorkers unless more officers were hired. Somehow an additional 1,000 officers were hired to “put the cop back on the beat.”
The TWU isn’t even the most rapacious group of workers in the MTA. That prize goes to workers on the Long Island Railroad, where featherbedding and fraud are endemic. That should be no comfort to subway riders, however. By providing LIRR workers with a new contract and that provided no end to the featherbedding and fraud, and allowing the LIRR to continue to cover a lower share of its costs than other MTA subsidiaries, Governor Cuomo extended the policy of using money squeezed out of subway riders to help pay for LIRR ripoffs too.
If the TWU is less rapacious than other public and publicly-funded unions and contractors, however, it isn’t for lack of trying. In 2005 the union went on strike with a demand for pensions at age 50 after just 20 years of work, retroactively awarded. The circumstances of that strike are currently accurately described, as of the day of this post, on Wikipedia.
The false claim is that this and other threatened strikes are about “respect.” But it is clear that if strikes are about respect, it isn’t the TWU or the LIRR unions that should be striking. It is subway riders. It is they who are sneered at rather than respected.
There is a way that one group of workers, say transit workers, can become better off without making other groups of workers, say subway riders, worse off. By having the group of workers that is becoming better off offset this with higher productivity, so that fewer workers are required to do the same work, or the same number of workers can do more work.
Here the picture is mixed with regard to the TWU, as noted in the table below. That table is a thought experiment based on how many subway workers would be required to do the same work in 2007 as was done in 1986, based on an assumed 1.2% productivity gain per year. The spreadsheet is here.
And here is the table.
The data show that the subway’s Car Equipment Division, the workers who maintain the subway cars, employed 6,542 workers in 1986. If their productivity increased by 1.2% per year, they would only have needed 5,077 workers to do the same work in 2007. These workers beat that goal easily. The division only employed 4,759 workers in 2007, but it also did far more work – with scheduled maintenance replacing key parts before they fail, the mean distance between subway car breakdowns soared.
The same trend may be observed for Maintenance of Way, the workers who maintain the subway infrastructure. This division employed 8,601 workers in 1986, and would have employed 6,675 workers to do the same work in 2007 after a 1.2% productivity gain per year. Actual employment, as best as can be determined given NYCT reorganizations, was nearly identical at 6,754. Here, as well, more work is getting done, with tracks in better condition. Although signal workers are having a hard time keeping up with repairs to the aging signal system, and there have been reports of falsified inspections.
These improvements can be attributed to three factors.
First, after much conflict in the administration of former New York City Transit president David Gunn, the Transit Workers Union agreed to a day’s work for a day’s pay. Worker titles were broadbanded and workers were cross-trained, so they could keep working as needs changed instead of standing around claiming it was “not their job.”
This reversed the massive productivity decline that occurred when the City of New York took over the former private subway lines. My father-in-law told me that his father, a transit worker, had said that within weeks of that takeover, infrastructure maintainers (he was a painter) started knocking off after working a half-day. There was a second massive productivity decline in the 1960s after transit workers were retroactively granted a pension after just 20 years of work, and everyone who knew what they were doing retired without training anyone else. That pension deal, the one the TWU sought to replicate by striking, wrecked the system.
Second, organization improved so that workers would spend less time with nothing to do simply because of poor scheduling. FastTrak is an example of this.
Third New York City Transit invested in materials and equipment that required less work. Subway cars with more accessible parts for maintenance, for example, and track panels that be installed as one big piece with the help of advanced machines.
Belatedly, moreover, the MTA has also reduced its administrative overhead. Since I haven’t worked there since 2004, I can’t know for sure if this has resulted in rising productivity or diminished management, but it at least possible the former is true. After 2007, therefore, there may have been a reversal of the increase in “other” from 1986, when I worked for the New York City Transit Authority and worked my ass off, and the early 2000s, when I returned to the agency for a few years and was underutilized. Management has also suffered a long-term salary freeze, with their pay falling far behind overall inflation and the increase in the pay and benefits of the people they supervise.
There were, on the other hand, no similar productivity gains for the Rapid Transit Operations (RTO) department, the workers who actually operate the trains and signals. This group employed 7,805 workers in 1986, and would have employed 6,057 people to operate the same number of trains in 2007 if their productivity had increased 1.2% per year. That could have meant 1,750 workers would have been freed up to operate additional trains. Instead the number of workers fell only slightly, and it would not surprise me if there were less service in 2014 than there had been in 1986. Productivity, in other words, may have been negative. That is one of the reasons why service levels are so low relative to 1954.
On the other hand, say the TWU were to agree to have one person rather than two operate subway trains on some lines, perhaps those with CBTC or short trains, or at some times, say off-peak, or in some areas, say the outer portion of the lines. Given the consensus of those on the inside that subway riders are serfs, what guarantee would the union have that the savings would be used to increase service, keeping employment constant, rather than just reduce employment and redirect funds elsewhere in the MTA, or elsewhere in the state?
I wonder what the same sort of thought experiment would show for the LIRR? Probably negative productivity as well. Not that this should concern people from Long Island because, as mentioned, subway riders are made to pay part of the price.
Subway Car Availability
Even if productivity were higher, RTO workers couldn’t run more trains if there were no more subway cars to put in service. And New York City transit would have difficulty adding more subway cars to the fleet, because it doesn’t have enough places to store them overnight. As it is subway trains are stored out on the right of way in select locations, because there isn’t enough room in the yards.
But are more subway cars required to run more service?
In 2013, according to the National Transit Database, New York City Transit had 6,277 subway cars. But it only operated 5,238 in maximum service, meaning more than 1,000 were out of service in the shop on a given day, or nearly one-sixth of the entire fleet. In 1954, in contrast, when peak hour service levels were much higher, the fleet had fewer than 5,900 subway cars. That meant that far fewer subway cars were out of service at any one time. So New York City transit is running fewer trains in peak service after having invested in more cars.
Some of this may the price of improved reliability, with cars spending more time in the shop for scheduled maintenance rather than running until they broke down out on the road.
But some of it comes back to labor. If more of the maintenance were done overnight, rather than during the day, far more cars would be available at peak hour. More service could be provided with the same number of subway cars. It is very likely that far more overnight car maintenance was done when the IRT and BMT were in private hands, a practice that probably continued in the early years of public ownership. Perhaps as late as 1954.
Overnight work is unpleasant and, according to some studies, unhealthy.
Although night shift work is probably not as bad as rotating shifts, and some people are night owls. It is because night shift work is undesirable that there are probably far fewer people working overnight in general than there were in 1954, not just among transit workers. And transit workers get higher pay – a night shift differential – to work overnight. (Though under the TWU contract they also get night shift pay when not actually working overnight). Higher pay for actual overnight work is certainly justified, but it appears that at least with regard to subway car maintenance the MTA is reluctant to pay it. And that is one reason that the subway requires so may out of service spares during peak periods.
Contrast that with the $billions in extra pay New York City and State have been paying since the Pataki Administration to shift road maintenance to nights and weekends. Money the past drivers who benefitted weren’t forced to pay, because all that extra money was borrowed. (In fairness, under FastTrak the MTA has moved more infrastructure maintenance to the overnight hours as well).
While there may be some labor and operations issues that result in the MTA running fewer subway trains with more subway cars, there is a broader issue as well. When most people use the word “productivity” they are referring to labor productivity. But other factors of production, such as land (ie. the land on which one stores subway cars) and capital (ie. the equipment needed to produce subway service) can have higher and lower levels of productivity as well. Simply substituting one factor of production for another, as more equipment for fewer workers, doesn’t make you better off unless there is a net gain. Although at least land and machines don’t require more than one year paid for in retirement for each year worked.
The MTA, and many public agencies, have low capital productivity. Private companies, while often under-investing (see Verizon Fios), at least tend to get far more use out of the capital they have. Public agencies, in fact, often don’t care about the cost of capital at all, since it is often paid for by another level of government or by debt, which shifts the cost to future generations. Thus there is no short-term political cost. Funded by debt, and exempted from the need for a balanced budget, “capital money is less green.” At least in the present. But what was the present is now the past, and what was the future is now the present.
Generation Greed’s Debts
If the subway has been less burdened by unproductive and unfairly compensated labor that some other public agencies, it has been more burdened by debt. In fiscal 2016, according to MTA budget documents, the MTA is paying nearly $2.7 billion in debt service, compared with just $6.1 billion in fare revenues. Back in 1954, in contrast, debts incurred to build the transit system were funded directly from the city budget, as had been the case since the start of the subway in 1904. All that money sucked into the past is not available to maintain, expand or operate the transit system today.
Somehow I just don’t understand people. It is perhaps understandable that some ignored the future consequences of rising debt when I started getting upset about it couple of decades ago, when the consequences were in the future. How can people make the claim that anyone who objects to the solution of more debt is a “debt scold” today, AFTER the consequences have arrived? The only solution anyone seems to have is to dig to the hole deeper to put off the pain that is already guaranteed. And not just in mass transit or even just in government.
The on the books debts, moreover, aren’t the half of it. Since the first subway line completed construction in 1904, in 1954 there were no subway lines with signal systems that were more than 50 years old, except perhaps on the Third Avenue El. Today more and more lines have signals that are more than 75 years old. Basically the MTA has been crawling out of an infrastructure debt that started to open up in the early 1960s under the “pragmatic” mayoralty of Robert Wagner, when maintenance was deferred. But that infrastructure debt, which still partially remains, was shifted to a larger financial debt, a process that threatens to reverse as the MTA goes broke.
Then there are the pensions and other retirement benefits, promised and retroactively increased in the past but not paid for at the time. This year, the MTA will pay out $1.75 billion in health and welfare benefits and $1.3 billion in pension contributions. But how much of that is going to today’s workers, either in benefits they are using today or into funds that will provide benefits when they are retired? And how much is being sucked into the past?
Up in Connecticut, the public employee unions and the politicians they support are now keen to let people know that it isn’t current workers who are to blame for the increasingly worse deal that everyone else is getting. So they are willing to admit that “82 percent of the $1.51 billion the state will contribute this fiscal year to state employees’ pensions will help cover past contributions Connecticut failed to make, as well as the corresponding investment earnings it never received.” “Similarly 70 percent of the $976 million it will deposit into the teachers’ pension fund is to cover unpaid contributions and unachieved earnings from prior years. That means more than $1.9 billion of the nearly $2.5 billion in contributions Connecticut will make this fiscal year are to whittle down the fiscal sins of the past, and don’t reflect the cost of current workers’ benefits.”
So what would that percentage be for the MTA? Including debts as well, how much of the fare dollar is going to past, sucked away from the present by Generation Greed, rather than any transportation at all? As I noted here…
Combining state and local government debt, inadequate past infrastructure investment, and pension underfunding, if New York City were a separate state it would have the most sold-out future of any state. Battle the unions as much as you want to squeeze current public workers the way other workers are being squeezed. But one thing everyone in politics seems to agree is that those who cashed in as the future was sold out aren’t going to give anything back. The deal for everyone else is thus going to get worse and worse and worse, and not just at the MTA.
Because most of the cost of the transit system is fixed, both the cost of service increases and the savings from service cuts are relatively small on the margin. Huge cuts would be required to make up for these relentlessly rising costs from the past. Far more than anything we have yet seen.
Worse, those costs are likely to really surge at the same time that tax revenues – including MTA dedicated taxes, and in particular real estate transfer taxes, will also plunging. As the latest asset price bubbles deflate. Pension costs will surge even more as stock prices fall and officials are forced to admit the scope of the underfunding that, in reality, already exists. And the MTA’s interest costs could rise as bond investors price in the increasing chances of default.
These are systemic problems. One finds them in San Francisco, where transit workers abuse the good intentions of that city’s liberal pro-unionism with bad work and rampant absenteeism.
And West San Francisco NIMBYs, opposed to additional housing development and new people moving in, have kept half the city devoid of stoplights, forcing light rail trains to come to a full stop at stop signs for miles.
One finds terrible transit problems in Boston, where soaring debts and pension underfunding had produced an ongoing financial crunch, and decades of underinvestment caused the system to grind to a halt in last winter’s snows. Things got so bad the head of the transit agency decided to get out of dodge rather than continue to accept blame more fairly assigned to decades of politicians and their backers.
And things are so out of control that a train full of passengers ended up rolling down the tracks with no one driving, because the train operator decided work would be easier if he jury-rigged up a way to defeat the deadman safety feature.
And then there is Chicago, where three ghosts visit transit riders on Christmas, one of whom shows how great their transit system once was, one to foretell the doom to come.
Not for reasons the writer of this post apparently understands, but because of decades of future-selling in Chicago and the State of Illinois nearly as great as what occurred in NYC, and a pension hole that is as large.
As New York’s Ghost of Christmas Future, I can see it with perfect clarity. Signal or train car troubles that delay service on a very crowded line. A platform filling with impatient subway riders. Trains finally coming that are too full to board. More crowding on the platform, with people now packed to the edge and unable to leave the station unless they are directly adjacent to an exit (yes I have seen something like this happen recently). Some tomfoolery by a group of teens, a little pushing, a panic – and a few dozen people tumble to the tracks and are killed and maimed by an onrushing train.
May these shadows yet be altered? Probably not.
But there is, perhaps, one final outrage that be prevented. One I can see in my mind clear as day, and that makes my blood boil in advance.
The sight and sound of state legislators, former state legislators now in other offices such as city and state comptroller, and former legislators now in jail, current and, to a greater extent, former Governors and Mayors, the union leaders, and retired and soon-to-retire members, along with the contractors and their unions, all rising up to express their own outrage and sadness when this tragedy eventually occurs. Instead of laughing and saying “so long and goodbye serf suckers, we won!” Can someone take up a collection to send them champagne and cakes so they can do something a little more honest, like celebrate?
None for Cuomo, DeBlasio, and Pendergast, however. They are likely to be the people left standing, with everyone staring at them with tears of rage in their eyes, when the music stops. And respond by blaming each other. What is it like to receive the sole blame and outrage for what has gone on for decades, after one term of failing to tell people the hard truth about difficult realities? Give Chicago Mayor Rahm Emmanuel a call. He may be figuring it out.